ESMA Identifies Good Practices That Companies Should Follow When Carrying out Pre-Close Calls

On 29 May 2024, the European Securities and Markets Authority (ESMA) issued a statement on good practices to be followed in relation to pre-close calls with research analysts. The calls take place immediately before the close periods preceding the publication of financial results.

European regulators have recently observed situations of high volatility in the prices of EU issuers’ securities shortly after pre-close calls, which raised suspicions that those issuers may have unlawfully disclosed inside information during the calls.

ESMA reminds issuers that they should only provide non-inside information during these calls. ESMA also notes certain good practices adopted by some European issuers that could reduce the risk of unlawfully disclosing inside information — such as assessing whether any information to be shared at an upcoming call could be inside information, uploading materials used during the calls onto the issuer’s website, and keeping records of information disclosed.

UK listed companies should revisit their procedures around pre-close calls and consider adopting good practice points (taken from both the ESMA statement and historic UK guidance) set out in this Latham blog post.

Institute of Directors Launches Consultation on a Code of Conduct for Directors

On 6 June 2024, the Institute of Directors (IoD) published a consultation document on a Code of Conduct for Directors. The IoD has, in the past few years, proposed an industry-led code of conduct for directors to address the demand for accountability following recent corporate scandals.

The Code would apply to UK directors of organisations of all sizes in the private, public, and not-for-profit sectors. The IoD proposes that the Code would represent a voluntary commitment rather than creating additional compliance burdens. The Code focuses on promoting high levels of integrity by directors. It is structured around the following six key principles of director conduct — with each principle being further underpinned by specific undertakings:

• Leading by example: Demonstrating exemplary standards of behaviour in personal conduct and decision-making
• Integrity: Acting with honesty, adhering to strong ethical values, and doing the right thing (including complying with the letter and spirit of applicable law)
• Transparency: Communicating, acting, and making decisions openly, honestly, and clearly
• Accountability: Taking personal responsibility for actions and their consequences
• Fairness: Treating people equitably, without discrimination or bias
• Responsible business: Integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts

The IoD is seeking views on the Code from the business community and the general public by 16 August 2024. Amongst other things, the IoD is considering whether directors should publicly declare or disclose their adoption of the Code, and the role of regulators in encouraging adoption.